The Council of Europe has found that unfair dismissal protections in Spain are insufficient and that Spanish legislation breaches the European Social Charter.
A collective complaint by the Unión General de Trabajadores (UGT) led to the European Committee of Social Rights (ECSR) concluding that Spanish legislation does not afford sufficient protection to workers whose employment is terminated without valid reason.
Compensation ceilings could prompt employers to make a pragmatic estimation of the financial burden of an unfair dismissal on the basis of cost-benefit analysis. In some situations, this could encourage unfair dismissals” – committee decision
UGT’s complaint alleged the situation in Spain violated Article 24 of the revised charter, which provides people with the right to protection in dismissal cases.
The union argued that the mechanism for compensation in unfair dismissal cases in Spain does not allow adequate compensation to cover the damage suffered and fails to dissuade employers from dismissing unfairly. In particular, workers are only entitled to compensation up to a capped ceiling.
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In Spain, compensation for unfair dismissal cannot exceed 33 days’ pay per year of service, and is limited to a maximum of 24 monthly payments.
In cases of dismissal for objective reasons and collective dismissals for economic or organisational reasons, compensation cannot exceed 20 days’ pay per year worked, limited to a maximum of 12 monthly payments.
The ECSR found that, while the Spanish government asserted that one of the aims of the system introducing compensation ceilings was to provide greater legal certainty, “it cannot be excluded that the predetermined compensation might rather serve as an incentive for the employer to dismiss workers in an unfair manner”.
The decision added: “Indeed, in certain cases, the established compensation ceilings could prompt employers to make a pragmatic estimation of the financial burden of an unfair dismissal on the basis of cost-benefit analysis. In some situations, this could encourage unfair dismissals.”
The Spanish government argued that mechanisms did exist for unfairly dismissed workers to claim compensation above the ceilings set, but the UGT submitted that there has only been one legal case in which Spanish domestic courts actually awarded higher compensation and that courts generally rejected requests for additional compensation.
The committee concluded by 13 votes against 1 that Spanish unfair dismissal protections violated Article 24b of the charter.
The UK ratified the European Social Charter in 1962 but has not ratified an amending protocol or the revised charter. In 2018, the Council of Europe – an entirely separate body from the EU – found that statutory sick pay arrangements in the UK were in breach of legal obligations under the charter.
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